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tv   The Pulse  Bloomberg  March 7, 2016 4:00am-5:01am EST

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of course the unlimited, extremely cheap liquid provisions. going forward, the thing the ecb needs to focus on our working incentives for lenders to lend. >> if we have prolonged negative rates they start getting worried. if we are looking at negative rates at the moment, it looked like it will be prolonged. there's no optimism out there. japan-ification is happening. it has been anything but what was expected last year. we have slowing global growth. have seen financial happen quickly even though we are in a quantitive easing environment. i think the worry here is that negative rates are a calculation of traditional central-bank
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methods to slow the economy rather than a means to a more predict event. if you buy things negative then effectively you are getting less money. negative rates could stay for longer terms. sweden, 4% but still a negative rate. >> where will the next shot come from? the fed raising rates is the biggest shock. i don't think it will happen in march or june. from china, the news we've seen overnight with the chinese yuan, they have convinced the market as such they are not looking for a cheaper yuan. i think you do look at inflationary pressure. i don't think they will do that. come fromnk it will the federal reserve hiking too
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quickly? >> to an extent, i agree. i do not think it is strong enough to survive a strong dollar environment. the deflationary with the emerging market dollar, that has been a driving effect towards commodity prices and weakening purchasing power. i think we have seen most of the chinese yuan devaluation. midway through economic tolerancing, it cannot happen with an overbought exchange rate. something has to give. the way forward will be to deflate and monetize thomistic debt and look at the foreign-exchange reserves. economic debt. that could create my stresses. >> we will have plenty more on
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china next. with us and the polls. plenty coming up. we're live from brussels as european leaders gather in turkey to talk about the micro-crisis. ryan is there. what are the key issues? >> the main issues are what to do with the tens of thousands of refugees making the journey from turkey to greece and the rest of the eu and the rest of the refugees already here. how du restore the passports-free travel that has been under threat? what will the eu do for greece and turkey to get them to play ball on these issues? this is not a small one, fran. >> plenty to talk about it and we will be back with ryan through the show. also on today's, trump as the republican front-runner fails to win two states.
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as brent flirts with $40, we will interview a head of an oil and gas company next. ♪
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francine: you're watching the pulse. >> working with financers on the merit of making a counter bid according to people with knowledge of the matter. the german chemical producer has not made a decision yet to look
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at the company with a market capitalization of $55 billion. basf's trading lower. commerzbank has named the successor to the chief operating officer who will take up the role when his term ends april 30. they are known for overhauling its consumer banking unit. eds confirm the chief financial officer has resigned. it came after he expressed concerns that the move might jeopardize the group's financial situation according to people familiar with the matter. that's her bloomberg business flash. francine: china will give top priority to development, the words from the premiers report delivered at the start of the annual national people's congress in beijing. heidi is in beijing. what have we learned about the economic priorities of china? francine, we went into this
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weekend and the opening session hoping to get some clarity on exactly whether beijing will prioritize growth or sacrifice some of the short-term growth in order to put through some of these long-term painful structural reforms. growth one out in the end with the 6.5 cents-7% target. some are sighing that is just too high and does not give them enough space to put through some addressingforms overcapacity. inflation is set at 3% which is high given that it's tracking at 1.5 percent. the widening neighing of the ratesion of them2 at a higher than nominal gdp. it does appear that they're looking at propping up short-term growth and adding more leverage to the economy and may be putting off some of these hard reforms that were initially flagged, francine.
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us about thek to planned crackdown on loans for home down payments. they are trying to get risk out of the financial system. at the same time we've also heard about outflows this morning. yes, that's right. the risks are rising and it illustrates how hard it is for policymakers to be able to direct which way monetary easing goes. what we've seen since the easing cycle started in november 2014 our property rises -- property prices rising over the last 12 months alone and the recovery elsewhere in the country has patchy, at best. we have not had confirmation yet, but they will be clamping down on these loans that basically you can borrow money to pay the down payment adding to risk and potential asset double. -- bubble.
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this is part of a systemic issue and how much bad debt there is at the moment and that something policymakers are starting to approach. you spoke about outflows. we had the february foreign reserve data coming through and it is slow down a little bit in terms of how much of the reserve has deflated down another $28.6 billion. it's essentially baying on what we had estimated where we had record amounts of depletion in terms of japan's foreign reserve reports to try to stem depreciation in the currency. that seems to stabilize somewhat in line with the relative stabilization we had seen in the last month or so, francine. francine: plenty more from china through the day. yena.bring inmanish and we were talking about china
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before the break. you believe they will put further pressure on deflation around the world. even if they say they do not want to devalue, it will be very difficult. here -- i have two concerns. there's not enough depreciation in terms of the leveraging house on the rest of the world. the second problem, much of the --rative the hated by dictated by the growth problem. they have a debt problem that has led to a growth problem. getcine: actually it could a lot worse. over the of the possibility of seeing a financial crisis in china because of the debt burden? it has broken because of the financial model. you cannot have them diverge 200
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percent and expected to be a tenable model going forward. it has to happen in conjunction with its more productive areas. to be able to do leverage and balance and economy while keeping and sustaining domestic demand is a tough issue. they had their problem doubled up the moment. of that, when i will also say is if you look at the new growth members, credit expansion in china and the index , gdp is not growing at the rate they say. if you look at what the board has come up with, the new index where they take into account retail sales and tourism, those numbers indicate that it is growing at close to 6%. what i found interesting is that there is no mention of the internet was eight of the renminbi.
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they do not want to open the capital account as they thought .hey would the imf has reiterated they would include the yuan in the basket overnight. i agree that there is challenges, no doubt about that. they need to readjust it. there is more positive to look at. inncine: what about outflows february? this is still a concern. measuresecause of the that china put in place to not allow capital to leave. >> yes, the outflows are ultimately driven by domestic depositors wanting to shift money abroad. francine: is it capital flight or not? >> it is leaving for low yield areas. it is a matter of wealth preservation. leaving is
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reflecting, first, expectations that the yuan will have to begin further. they cannot hold onto this to reflect the economy wow, at the same time, deleverage and sustain. >> they came out with a report that said all lot of the cash was used down to pay the dollar debt. i ask myself, can china control capital outflow? yes, they can. that is a more important argument. julian: they control everything -- francine: they control everything. if they get it right, they can manage this transition very smoothly. >> they are managing it. it's a very difficult job. look at the housing economy. it is not the same economy it used to be before. it's a service economy, which is how china is changing. it's a massive economy that
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needs time to adjust. tread carefully. and lena,manish thank you. up next -- it is like the jailer accidentally left the door open is people can see what beyond. everyone is wrangling about the terrors of the world outside. huge weight lifted from british business. francine: we talked boris johnson. we discuss what a british exit from the eu would mean for business. ♪
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cook's you are either in the single market or not. if you're not, you have trade agreements. there are countries within europe that are postured in the market. -- theye to accept the have all of the disadvantages of the colin market and they are not involved in the decision-making process. francine: that is german finance minister. let's get more on the brexit question. when i come how do you view brexit? it seems like is unnecessarily
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.eighing on investor sentiments we don't know what the u.k. would look like. lena: i completely agree. as far as concerns that's as far as i'm concerned, there are two stories. one is the macro market story. there is a windscreen for broader dangerous political pragmatism happening globally when you look at the polls across europe from greece to france to germany over the last year. the rise of the process antiestablishment vote. i am a little worried because central banks have the only -- are the only game in town. they are incapable of facing down the global shock that we are facing, similar to a decade ago. francine: mannish i know if it -- anish i know we have had questions before about the economic fallback. we don't know what the day after
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brexit would look like or london two years from now. who do you go to when you look at research? manish: when you look in poll numbers, 70% of people are undecided. -- 17% of people are undecided. there is research that the poll numbers reflect younger generation. if you set them aside and we are talking about -- there is not been a next -- and exit from eu before. i think both sides will have things to lose and there will be more corporation that people are thinking about. francine: in the case of a brexit. anish: it comes down to politics. it will be come going forward. if you have a growth slowdown.
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we are not growing. there is a disappointment with the economy, you find a changeat taking it will thanks. francine: li na you were talking about segmenting the desk li na, you are talking about fragmenting -- people get afraid to what happens next in the eu and we get shock. lena: the remarkable thing is we -- not have another institutions that exposed to correlated asset volatility that in terms raises interbank markets. ultimately the lessons we learned a decade ago from the last crisis is still with us. banks are only as strong as the networks and markets. the markets are only as strong as the ability to price
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uncertainty. -- 40%.possible to it is not enough. francine: li na, think is a much. we're back in two and we will be talking about refugees next. ♪
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francine: welcome to the pulse -- let's getdon to to the news. the drop in chinese final reserves fell to $3.2 trillion. that's according to data from the people's bank of china. the news comes as officials take to the podium at the people's congress again today to outline priorities at a time of slowing
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growth for the country. the iranian billionaire has been sentenced to death after being found guilty in a fraud case involving an oil fund. the court convicted him and two other people who were also sentenced to death. they were also ordered to repay a quarter of the money they laundered. he can appeal the verdict. donald trump and ted cruz got a split decision in four states on saturday. the nomination race has not changed dramatically. scored aninton overwhelming when over bernie sanders in louisiana. she has a solid lead for the democratic nomination. german factory orders fell for a second month in january. there is a seasonal swing inflation.
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the latest sign that a global slowdown and weak domestic pricing power may be hurting europe's largest economy. global news 24 hours a day powered by our journalists in more than 150 news bureaus around the world. tom: let's head to mark barton. they opened on a high. the function. this is where all the main european forces are faring today. ofs is digesting news out china over the weekend began the 6.527% targets were the growth rate. to reach the new target of course, the government will permit a record high deficit. that will grow even as growth slows.
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investors fixated on that. we have seen three consecutive weeks of gains along the winning stretch of october. the ecb policy announcement will come on thursday. since they loosened policy on december 3, many would argue the stoxx 600 has dropped by 11%. one index it has been rising in recent days is the msci emerging markets index. in therisen by almost 8% last seven days greater the stocks are rebounding by 15%. let's have a look at wti. crude level is rising to the highest level since january 4.
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wti is trading above $36. u.s. drillers are cutting the number of active rigs to 392. that's the least in more than six years against the global glut. hedge funds are on the fastest pace in 10 much. week, theor the third longest winning stretch since may as u.s. production slipped to the lowest level since 2014. crude oil is the highest level -- januaryry 4 grade 4. francine: thank you so much. few days in aod terrible year for oil. is the worst over for producers? let's talk to the largest producer of motor fuel from
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coal. a 63%ave just reported drop in a profit. thank you so much for joining us. oil, iu see the price of know you have taken some measures to counteract the falling price, did you expect to remain so low for so long? we did not know what it was going to happen. we knew factors could hit us and we have been proactively working our programs here starting back order, we get us in had that program in place. when it really dropped in late 2014, we put a response plan in place to protect ourselves. we just announced today that we will be conserving 75 million through 2018.
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we are making sure we can protect our dividend and our credit rating and our balance sheets. that is where we're at right now. it's a very tough environment. how do you view it from now on? are you taking it worst-case scenario for the next two years? how do you guide looking at the environment? you don't have any say. we take a fairly prudent and conservative view. latewhat we saw early in december dropping into the 20's in january, we've looked at our assumptions again. we are very conservative. 16 -- 40 four fy
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16. we're making sure the company is healthy. we are protecting the balance sheet and their caring ratios and dividend. francine: how can you call bottom? what would it take for the price of oil to hit bottom and start owing up again? >> where i think the bottom is? francine: what needs to happen? where can you be sure that you have it the bottom price for oil? promisingre some signs. there is trust being built over and non-opec companies. there is some encouraging news about the potential meeting in march between russia and saudi possiblyenezuela, nigeria. that is very positive. that would certainly help.
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you talked about the rigs being cut back dramatically even though growth is looking stronger. there are quite a few factors. hedging of oil in the u.s. is coming off as well. they will be looking for higher costs overroduction there to be supported by a higher price. there are some encouraging signs. at the same time, you have to look at the pollution curves. per's 2.5 million barrels day per year. we're goings time, to need another 15 million barrels per day. you can't get there when you have that out of the upstream markets and projects.
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it's coming. i just can't tell you when. francine: will prices for base chemicals continue to decline? we have two pieces of our company in chemicals. we have base chemicals and performance chemicals. are being, alcohols very resilient in the market. it's slightly softer demand, but the margins are strong. , to chemicals right now give you an idea in our first fyf which started july 1 of 16, oil was down 47%. were downhemicals 23%. they are holding up a little better than oil. they are under pressure certainly. francine: thank you so much david constable speaking to us from johannesburg. leaders meet in brussels with
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the turkish prime minister. said hek prime minister has high hopes for the summit. to havelooking forward substantial results in these and the between turkey u.n. it. -- u.n. necessarye time, it's to accelerate the relocation and to substantially have a credible relocation process. ♪
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francine: leaders are in brussels for a meeting about the crisis. turkey has been invited to the summit and what with the eu like from turkey? in a nutshell, what the eu
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would like to see from turkey is a cessation from the refugees coming from turkey to greece or at least a stemming of the flow of refugees. what a lot of the countries would like to see is turkey agreeing to accept -- accept back the refugees that have already made that careless theney, and particularly refugees that don't qualify for asylum in the european union. all the refugees that haven't come from syria is much. turkey realizes that for its part, it can request things of the european union. it would like to see the european union fast track. that still hasn't happened. the eu would like to see some assistance foral turkey to help deal with the problems back at home so the
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european union doesn't have to. it's very clear that the eu needs turkey. they need to find a strong ally. as their criticism of their closing of the opposition paper? ryan: we did see some people criticize the closing event opposition newspaper and the police handing -- handling of the protests that took place after. we are told by people who watch turkey on a regular basis, that they are banking on the fact that the eu needs turkey so much right now to deal with this crisis to hold on the refugees and accept many back, it doesn't want to rock the boat if you will by allowing this criticism to get too loud of
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this crackdown back at home on domestic opposition. recognitione is a that at the end of the day turkey joined the -- joining the eu is not something that's going to happen in the next couple of years anyway. they have to give turkey something in return. much,ne: thank you so following that meeting in brussels throughout the day. we will have updates every hour. how does the migrant crisis compare to others? let's continue the conversation with the senior vice president. he joins us from russell's. it's great to have you on the program. is this a turning point for the eu? do they need to deal with it to make sure the eu stays together? i think it's certainly an assessment that i would agree to. at the end of the day what is at stake is shame.
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it's travel across that block of member states at the heart of the european union. series of border closures. if the goal is to return to free travel by the end of the year, that has important economic consequences for europe, europe will have to make progress in its relationship with turkey. they need to make sure the outside border is protected and travel functions on the inside. francine: what kind of relationship you see turkey and the you -- eu having? does that mean leaving the reprimand that we've heard over the crackdown on opposition leaders including the newspaper? do they need to give a bit of tough love? >> turkey has always been a difficult partner.
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at the end of the day if the goal is to limit the refugee in flow, you can't be too picky with your partner on the other side. it all boils down to turkey's role in this crisis. i think what we will see today is probably a conversation about that agreement under which turkey would take that illegal migrants that don't have a chance on asylum into the european union. there will be some progress in that direction. monetaryll want to see assistance from the european union. it will expect europe to remain relatively calm on that domestic situation in turkey. francine: what role does greece play in this? they are under a lot of pressure right now. that's going to be another conversation for greece. macedoniaborder with
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is deplorable. at the same time, it increases the pressure on north european states to find a solution quickly. allows thehand, it return to open up orders and at the same time it's a resolution that stems the refugee in flow and it's clear that if the situation continues with refugees flowing into greece and getting stuck there, that is unsustainable. focal pointally the under a lot of pressure. all eyes are on that. francine: how worried are you about public disquiet increasing? if we don't find a solution to the crisis, are we going to see more extreme parties voted in? francine: i think that is the main concern it. david cameron in the u.k. faces a crucial referendum.
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that will be very much about immigration. and negative pictures coming out of greece is the last thing he will want to see in the run up to that referendum. the other leader is anglo merkel. she has a crucial election sunday. there is the possible for a right-wing extremist germany party scoring good results. leaders are under a lot of pressure. it will depend on whether they can basically sort out this pressure under which they are on. francine: thank you so much. he is speaking to us from brussels. up next, we will talk about donald trump. ♪
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francine: bernie sanders and hillary clinton have clashed over their stance on corporate sellout and trade deals. a more progressive bernie sanders in the debate last night. hans: you wake up here in europe and you get the overnight news about what happened in the states. the clear signal from last night's debate is that this election is going to go a lot
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longer on the democratic side as well as the republican side. it was clear that bernie sanders is trying a slightly different tack. he is talking more about his own experiences. he is trying to appeal directly to minorities. while they are scoring this as a clinton victory, i wasn't there. . the bigger signal is bernie sanders is going to say in this race for quite a while and he is going to be aggressive and he is not just running to make a point. he is running to be the democratic nominee. francine: talk to us a little bit about the republicans. i am thinking of donald trump. he had a little bit of a setback on saturday. hans: the bigger setback was marco rubio who came in third and most of those states. in one case he came in fourth. it does look like you could see a trump/cruise matchup.
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that was the story over most of the weekend. marco rubio one perrigo. he got a bit of a boost. if you look at the delegate count, it's pretty close. you can see how ted cruz is pressuring donald trump. 384, ted cruz has 300. rubio is down to 151. they split the states on saturday. the southern states want to trump. as we move for, we have the rust belt. we're going to see a test of how much donald trump can appeal outside of the southern block. does he have a rust belt message. i think that is one of the things to look at. -- ohio and ojai florida. it's like a national election.
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i'm sure you're fully saturated on election coverage. francine: when you are in the donald trump is a little bit addictive. he is outrageous. the more you him on tv, the more people watch. hans: i am not going to give a prediction on air. i am too crafty for that. it is addictive as well as profit. donald trump is driving ratings. he has made this point himself. foras been very good viewership and the bottom line of some of these news organizations on the broadcast side. i will give you my donald trump prediction when you give me your -- no, you're just going to me. -- trick me.
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francine: this is where the markets are at. stocks in europe were high. now we are seeing a little bit of a reversal. surveillance with tom keene is next. ♪
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francine: china outlines growth. it, theersus inflation 11th round. the bank of international settlements says negative rates are working for now. eu leaders meet with turkey's prime minister to contain the refugee situation. tom keene is in new york. even when i am in london, we


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